Collateral for Loans from Norges Bank - New Rules

Abstract

Norges Bank extends loans to banks against collateral in the form of securities. These loans are provided in connection with payment settlement and the implementation of monetary policy. Since the bond market in Norway is relatively small, Norges Bank has up to now accepted a broad range of securities as collateral. Norges Bank has thereby accepted a higher level of risk in its lending to banks than a number of other central banks. In recent years, banks’ available resources in Norges Bank – sight deposits and unutilised borrowing facilities – have increased more than borrowing requirements. This has made it possible for Norges Bank to adapt the rules for collateralisation so that they are more in line with rules in other countries. The article describes Norges Bank’s previous rules for collateral for loans, the background for the changes that have been made, the new rules and the consequences the changes might have for banks.